THE REGIONAL TRANSPORT OFFICER-CUM-TAXING AUTHORITY, ROURKELA AND ORS. versus STEEL AUTHORITY OF INDIA LTD.

Citation: [1995] SUPP. 5 S.C.R. 31 · Decided: 09-11-1995 · Supreme Court of India · Bench: M.M. PUNCHHI, SUJATA V. MANOHAR · Disposal: Dismissed
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Judgment (excerpt)

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THE REGIONAL TRANSPORT OFFICER-CUM-TAXING 
A 
AUTHORITY, ROURKELA AND ORS. 
v. 
STEEL AUTHORITY OF INDIA LTD. 
NOVEMBER 9, 1995 
[MADAN MOHAN PUNCHHI AND SUiATA V. MANOHAR, JJ.] 
Orissa Motor Vehicles Taxation Act, 1975 : 
Sections JO and 15-Schedule-ltems 3, 4 and 6. 
Motor Vehicles-Use by Employer for canying employees-Payment of 
tax under item 3-Later employer required to pay higher "tax under item 
4-Employer's case that tax was leviable under Item 6-Consensus between 
parties-Held till relief was sought under sections JO and 15 vehicles exigible 
B 
c 
to tax-Co1Tective measures for changing rates of tax under items 3 to D 
6--Liberty to State to come to a different conclusion after a fact finding 
enquiry. 
The Respondent-Authority was paying tax, under Item 3 of the 
Schedule to the Orissa Motor Vehicles Taxation Act, 1975, on the buses 
employed by it for carrying its employees from its township to its factory. E 
Later it was required to pay higher tax under Item 4 of the Schedule 
whereunder tax rates are prescribed for Motor Vehicles plying for hire and 
used for conveyance of passengers. The respondent contested the levy 
contending that as no charges were recovered from employees for use of 
vehicles the tax liability per se was not attracted under Item 4 but may fall 
F 
under Item 6 subject to claim of relief under Sections 10 and 15 of the Act. 
The High Court assumed that the change effected was from Item No. 6 to 
Item No. 4 of the Schedule. 
In appeal to this Court the respondent-authority conceded that an 
inquiry may be held on the footing that tax was exigible on its fleet of G 
vehicles but the change effected from Item 3 to Item 4 was uncalled for. 
Disposing of the appeal, this Court 
HELD : 1. The State cannot be permitted to act arbitrarily in 
choosing the Item of taxation and leave it to the subject to disprove H 
31 
32 
SUPREME COURT REPORTS (1995] SUPP. 5 S.C.R. 
A 
liability. State should examine the facts and then apply the charging Item 
on the plain language of the provision obviating any unjust imposition. 
(34-A-B] 
B 
c 
2. The appellant has failed to justify as to how straightaway jump in 
the rate of tax could be made without the necessary fact establishment. So 
till relief can successfully be sought by the Respondent-Authority under 
section 10 and/or 15 of the Act, it is exigible to tax and the corrective 
measures presently can be for changing the rates of tax under Item No. 3 
to Item No. 6, reserving the right to the appellant-State to come to a 
different conclusion after a fact finding inquiry, in which the respondent 
should be associated. Till such stage is arrived &t, there is no occasion for 
the appellant-State to demand tax over and above which in any event is 
due to it under Item No. 6. As this opinion is only embedded in the area 
of cons~nsus it shall not be taken to be a pronouncement on the ap-
plicability of Item No. 6. (33-G-H; 34-A; B-C] 
D 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8286 of 
1995. 
From the Judgment and Order dated 18.6.92 of the Orissa High 
Court in O.J. C. No. 847 of 1991. 
E 
Jayant Kr. Das and P.N. Misra for the Appellants. 
Altaf Ahmed, Additional Solicitor General, Fazlin Anam, Dhruv 
Mehta and S.K. Mehta for the Respondent. 
The following Order of the Court was delivered : 
F 
· The Steel Authority of India, the sole respondent herein, employs a 
fleet of buses meant to carry its employees from its township to its factory 
at Rourkela. This has been so for over three decades. For some inex-
plicable reasons, the Steel Authority of India Ltd. was all along being made 
to pay tax under Item 3 of the Schedule to the Orissa Motor Vehicles 
G Taxation Act, 1975 on buses kept by it on the footing of being goods 
carriers. As is the case of both sides, Item 3 was hardly applicable and yet 
tax was kept asked and paid. With effect from 19.12.1990, the appellant 
herein, i.e., State of Orissa and its officers,. put to change the head of 
taxation and required the respondent to pay higher tax under Item 4 of 
the Schedule, whereunder rates of tax are prescribed for motor vehicles 
H plying for hire and used for conveyance of passengers, including motor 
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REGNL. TPT. OFFICER-CUM-TAXING AUTHORITY v. SA.LL. 
33 
cabs. Challenging such step the respondent - Steel Authority of India, A 
moved the High Court of Orissa in a writ petition under Article 226 of the 
Constitution. 
Right at the outset, the High Court in dealing with the co
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